Airlines and other transportation carriers generally seek to maximize the number of passengers on each flight. Empty seats can represent lost revenue, and the marginal cost incurred by an airline by boarding an extra passenger is relatively small. Thus, minimizing the number of empty seats on a flight can maximize the profit for the airline.
Because of the lost revenue associated with empty seats on a given flight, airlines generally sell a greater number of tickets for a flight than there are total seats. The airlines assume that at least a portion of the tickets will go unused, and therefore overselling can help the airline minimize the number of empty seats on each flight.
Except in the rare case where an airline will successfully oversell a flight by the precisely correct number of seats, as flights approach their departure time there are generally either too many or too few passengers ready to board the flight. For example, if the airline oversold the flight, and in doing so, overestimated the number of passengers that would cancel their reservation, the flight is considered overbooked or oversold. In such cases, certain passengers, even though they may have boarding passes for the flight, may be asked to give up their seats on the flight and board a different flight to their destination, otherwise known as “bumping” the passenger from their original flight.
In other cases, flights may be underbooked or undersold. This may be because the airline oversold the flight but underestimated the number of passengers that would cancel their reservation. Alternatively, the airline may not have oversold the flight in the first place. Regardless of the reason, when a given flight is undersold, the airline may allow other passengers to board the flight, even if they did not have a ticket for the flight. Often times, these so-called passengers may have a ticket for a later flight to the same destination on the same airline, but have arrived in time to catch the earlier flight and seek to fly standby on the earlier flight. These standby passengers can board the earlier flight and give up their seat on the later flight. This can be advantageous to the airline because it reduces the number of empty seats on the earlier flight, and allows the airline additional time to replace the passenger's seat on the later flight.
Conventional policies for boarding standby passengers on undersold flights and “bumping” passengers from oversold flights can vary. For example, conventional airlines often charge a fee to standby passengers, in an attempt to capture extra revenue from passengers seeking to change their flight. Conversely, when determining which passengers to bump from oversold flights, airlines often provide a voucher or other financial incentive to passengers willing to give up their seats in exchange for seats on a later flight.
These conventional policies and methods for charging fees to standby passengers and providing financial incentives to those passengers willing to give up their seats both pose certain problems for airlines. For example, airlines charging fees for standby passengers often struggle to determine the optimal standby fee. They often must use principles of supply and demand to set a fee sufficiently high to generate significant revenue, but not so high to deter a significant number of passengers from flying standby. This optimal fee can be difficult to estimate, and any fee other than the optimal fee can result in lost profits. Furthermore, setting one optimal—or even near optimal—fee for all flights can be impossible, given that different flights of an airline may have vastly different passenger demands based on a variety of factors such as the routes, time of year, and time of departure for the flight.
With respect to incentivizing passengers willing to be bumped from their flights, airline policies generally involve offering a certain incentive to passengers to exchange their seat for a later flight, and repeatedly increasing the incentive until a sufficient number of passengers have given up their seats. According to conventional airline policies, all bumped passengers may receive the identical incentives, equal to the latest (and highest) amount offered by the airline. Thus, under the conventional model, some passengers may receive a greater financial incentive than what they would be willing to accept to give up their seats, thus representing an extra cost to the airline.
Another deficiency with the conventional model for providing financial incentives to bumped passengers is that the airline generally announces the type and amount of financial incentive and the number of seats by which the flight has been oversold. This often occurs at the departure gate for the flight, with willing passengers approaching the airline staff to accept a given financial incentive. This model can allow passengers to see how many seats are needed, and how many passengers have given up their seats. Passengers thus can try to “game” the system, by waiting for the incentive to increase until it seems that almost enough passengers have given up their seats before giving up theirs, even if they would have been willing to take a lower financial incentive to do so. This behavior, allowed by the conventional model, also can result in increased cost to the airline.
Thus, a need in the art exists for a system and method for determining which standby passengers to board an undersold flight and for determining which passengers to bump from an oversold flight that lacks the deficiencies associated with conventional models. Specifically, a need in the art exists for a method for determining which standby passengers to board a flight that reduces or eliminates the need for an airline to determine a set standby fee to charge passengers. A need in the art also exists for a method for determining which standby passengers to board a flight that increases the airline's profits by accounting for the different supply and demand for standby seats on different flights. Another need in the art exists for a method for determining which passengers to bump from an oversold flight that reduces the extra costs to the airline associated with providing each bumped passenger with the same financial incentive. Yet another need in the art exists for a method for determining which passengers to bump from an oversold flight that reduces the costs associated with passengers knowing the financial incentives that other passengers are willing to accept to be bumped from the flight.